Child tax credit dollars go to parents

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Washington (AFP) – The child tax credit has long been an empty gesture to millions of parents like Tamika Daniel.

That changes Thursday when the first payment of $1,000 arrived in Daniel’s bank account — and dollars began flowing into the pockets of more than 35 million families across the country. Danielle, a 35-year-old mother of four, wasn’t aware of the tax credit’s existence until President Joe Biden expanded it for one year as part of the $1.9 trillion coronavirus relief package passed in March.

Previously, only people who earned enough money to owe income taxes were eligible for the credit. Daniel has spent nearly a decade without a job because her eldest son has autism and needs it. So I got my Social Security payments. And she had to live in Fairfield Courts, a public housing project that is at a standstill at Interstate 64 as the highway cuts through Richmond, Virginia.

But an extra $1,000 a month for the next year could change the life of Daniel, who now works as a community organizer for a nonprofit organization in Richmond. It will help to provide a security deposit on a new apartment.

“It comes at the right time,” she said. “We have a lot going on. This definitely helps lighten the burden.”

Biden has identified the new monthly payments, which will average $423 per family, as key to halving child poverty rates. But it is also waging a broader philosophical battle over the role of government and parental responsibilities.

Democrats view this as a historic Social Security-style program, saying it will lead to better outcomes in adulthood that will aid economic growth. But many Republicans warn that the payments will discourage parents from working and eventually lead to long-term poverty.

About 15 million families will now receive the full loan. Monthly payments are $300 for each child 5 years old or younger and $250 for those 5 to 17 years old. The payments are due to expire after a year, but Biden is pushing to extend them until at least 2025.

The president eventually wants to make the payments permanent – and that makes this first round of payments a test of whether the government can improve families’ lives.

Biden will deliver a speech Thursday at the White House to mark the first day of payments, inviting recipients to join him as he seeks to raise awareness of the payments and lobby for their continued.

“The President felt it was important to bring this issue up, to make sure that people understand that this is a benefit that will help them as we are still working to recover from the pandemic and the economic recession,” White House Press Secretary Jen Psaki said Wednesday.

Florida Republican Senator Marco Rubio, who successfully advocated for the credit increase in 2017, said Democrats’ plans would shift benefits to a “work care-versus-work check” because nearly every family can now qualify for the payment regardless of whether the parents have a job.

“The Biden plan would not only do away with the incentives to marry and work requirements, but it would also destroy the child support enforcement system as we know it by sending cash payments to single parents without guaranteeing the creation of child support orders,” Rubio said in his book.

An administration official disputed these allegations. The Treasury estimates that 97% of tax-exempt recipients have wages or self-employment income, while the other 3% are grandparents or have health problems. The official, who asked not to be identified to discuss internal analyzes, noted that the credit It starts by phasing out $150,000 for subscribers, so there’s nothing to discourage the poor from working because the job will give them more income.

The problem is inequality, said Colorado Democratic Senator Michael Bennett. He said economic growth has benefited 10% of earners in recent decades, while families struggle with rising costs for housing, childcare and health care. He said his Colorado constituents are concerned that their children will be poorer than previous generations and that this requires expanding the child tax credit.

“It’s the most progressive change to US tax law ever,” Bennett told reporters.

Parenting is an expensive task. The Department of Agriculture estimated in 2017, the last year such a report was published, that the typical household spends $233,610 to raise a child from birth to age 17. But the richer children invest much more in their education and upbringing, while the poorer children face a constant disadvantage. Families in the top third of income spend about $10,000 more annually per child than families in the bottom third.

The Child Tax Credit was created in 1997 to be a source of relief, but it has also become a driver of economic and racial inequality, as only parents who owe federal government taxes are eligible to pay it in full. Academic research in 2020 found that about three-quarters of white and Asian children were eligible for full credit, but only about half of black and Latino children did.

In the census where Daniel lives in Richmond, the median household income is $14,725, nearly five times lower than the national average. Three out of four children live in poverty. For the typical parent with two children in that part of Richmond, the extended tax credit would raise income by about 41%.

Tax relief is as much about keeping people in the middle class as it is about upgrading the poor.

Katie Stelka of Brookfield, Wisconsin, was laid off from her job as a buyer of beauty and hair care products for the Cole department store chain in September as the pandemic tightened its grip on the country. She and her two sons, 3-year-old Oliver and 7-year-old Robert, were left to rely on her husband’s income as a retirement services consultant. She said the family was already struggling to pay for her husband’s kidney transplant five years ago and his ongoing treatments before she was released.

With no job opportunities, Stelka re-enrolled in college to study social work in February. Last month I got a new job as the assistant CEO of the nonprofit International Orthodontic Association. Now she needs daycare again. This amounts to $1,000 a week for both children.

Stilka, 37, said all of the tax credit money will go to cover that.

“Every little bit will help now,” she said. “I pay for school out of my pocket. I pay for boys’ stuff. Food and everything else has gone up. We are really grateful. The tide seems to be turning.”

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Associated Press writer Todd Richmond in Madison, Wisconsin, contributed to this report.

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